1. units required to earn a desired profit = fixed cost + desired amount of profit
contribution per unit
contribution per unit is not given, therefore,
contribution = selling price - variable cost per unit
= 40-25 = 15
units required = 360,000+150,000 / 15
= 510,000/15
= 34,000 units.
2. as per the question,
units= 47,400 fixed cost = 532600, (because the units produced is between 40,200 and 81,300.)
desired profit = 131,000 variable cost = as it is not given, assume as V
price = 22
we know that,
units required to earn desired profit = fixed cost + desired profit / contribution per unit
contribution = selling price - variable cost
= 22 - V.
substituting in above formula gives,
47,400 = 532,600 + 131,000 /22-V
47,400 = 663,600 / 22-V
47,400 (22- V) = 663,600
22-V = 663,600 / 47400
22-V = 14
V = 22-14
Variable cost = 8.
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